Good morning, ladies and gentlemen, and welcome to Movado Group's First Quarter Conference Call. [Operator Instructions] And as a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Ms. Jennifer Milan of FTI Consulting. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; Rick Cote, President and Chief Operating Officer; and Sallie DeMarsilis, Chief Financial Officer. Before we begin, I would like to note that this conference call contains forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to differ materially from any future results expressed or implied are discussed in the company's filings with the Securities and Exchange Commission. Such forward-looking statements include statements regarding Movado Group's performance for fiscal 2013. However, the failure to update this information should not be taken as Movado Group's acceptance of these estimates or forward-looking statements on a continuing basis. Movado Group may also choose to discontinue presenting future estimates at any time. Let me now outline the order of speakers for today's conference call. Rick will begin, then turn the call over to Sallie, and Efraim will close. Management would then be glad to answer any questions you might have. And now, I would like to turn the call over to Rick. Richard Coté: Thanks, Jennifer. Good morning, and welcome to our conference call. We are very pleased with our strong first quarter financial results. Importantly, the strategic fine-tuning of our brands over the past few years is bearing excellent results, which is demonstrated by the consistently positive sales trends we have delivered over the last 9 quarters. We are also particularly pleased with the significant improvement we have achieved in our profitability even in the face of what remains a challenging environment and rising costs. We believe our top and bottom line performance underscores the strength of our brand portfolio and the…

Thank you, Rick, and good morning, everyone. I'm very pleased to be with you today presenting our financial results for the first quarter. I will first cover the operating results, followed by the balance sheet, and I will close with guidance. To begin, sales for the first quarter were $103.7 million, up from the same period of the prior year by $13.8 million or 15.4%. Higher sales were driven by growth in both the U.S. and international businesses. For the first quarter, sales in our wholesale segment were $93.5 million or 16.9% above sales of $80 million for the same period of last year. The increase in sales was driven by growth in the accessible luxury and licensed brand categories. U.S. wholesale business was $40.8 million or 15.2% above sales of $35.4 million for the prior-year period. The increase in sales was driven by growth in the accessible luxury and licensed brand categories. International wholesale business was $52.7 million, up 18.2% year-over-year compared to $44.6 million last year. Sales growth during the first quarter was driven by the licensed brand category. Sales were strong in South America, northern Europe, Asia and Canada. Sales from the company's retail business increased 3% versus the prior year first quarter. At the end of the quarter, the company operated 33 outlet stores. Gross profit for the quarter was $59 million versus $48.6 million in the first quarter of last year. This translates to gross margin of 56.9% as compared to 54.1% for the first quarter of last year. The increase in gross margin was primarily driven by a shift in channel and product mix, as well as leverage gained on fixed costs due to higher sales. Operating expenses were $50.5 million, above the prior-year by $3.5 million or 7.4%. The increase for the quarter…

Thank you, Sallie. I would also like to note how pleased we are to have achieved such a solid start to the new fiscal year as we continue to build on the momentum we restored to our business over the past 2 years. The first quarter of fiscal 2013 marks 9 consecutive quarters of revenue growth for Movado Group, and we believe this consistency is the direct reflection of the strategic initiatives we have implemented to enhance the value proposition and improve the competitive positioning of each of our brands. As Rick and Sallie mentioned, we again achieved double-digit sales growth in the first quarter, driven by a particular strength in our largest business Movado and our licensed brands. With respect to Movado, product segmentation and the design of new products into specific pillars have allowed us to enhance and better focus our assortments, effectively improving our competitive positioning and providing further validation of our strategy. Moreover, we are also encouraged by the strong customer acceptance of our new products, such as the Cerena, of the infusion of fashion provided by Movado Bold continues to create excitement around the entire brand. The repositioning of ESQ to ESQ Movado has been well received by our retail partners, and we believe the new designs with new branding that will begin to appear at retail in September will help to further energize the brand. Additionally, while our strategic focus on women's watches for Ebel has been gaining traction, we remain on track to launch 2 new collections in time for the holidays this year. We believe these collections, which will be supported by an all-new marketing campaign, will spur a renewed excitement around the brand. As we look to the remainder of fiscal 2013, we believe we have the right strategy, team and product and marketing programs in place to maintain consumer excitement throughout the balance of the year. While the macroeconomic environment remains uncertain, we will continue building on the initiatives we have implemented. Specifically, we'll continue to refine our product lines and introduce focused, frequent innovation, which is a hallmark of our company, keep our brands fresh and relevant with consumers. Importantly, the solid infrastructure we have in place provides us with a global platform to grow sales, while our healthy balance sheet allows us to reinvest in the business and to drive sustained profitable growth and return value to our shareholders. With consistent execution against our strategic initiatives, we remain confident in the future of the company. We would now like to open the call up to questions.

[Operator Instructions] We'll take our first question from Oliver Chen with Citi.

My question is related to your exposure within Europe. What are you -- could you refresh us on your top markets there -- your top 3 markets there and also what you're seeing in the marketplace with respect to Germany and the customer and how your business is going there. And then, if there's anything we should know in terms of distribution versus comp growth opportunities in these markets. Richard Coté: A couple of things. Number one is obviously, we don't go into detail by market, but as we did highlight, our largest markets there are Germany, U.K., Spain. And as I outlined in my guidance in there, we see northern Europe being modest growth as we kind of look forward and we see the southern Europe continuing with economic uncertainty and what's going to take place there.

And I think to the second part of your question, it's not really new distribution growth, it's continued sell-through within the existing distribution.

Were there any characterizations as a follow-up to kind of the brand performance or the product performance within these regions that was noticeably different in your core versus licensed? And also...

Most of our business in Europe, the largest part of our business is licensed brand. And I think, as Rick alluded to, the performance in southern Europe was more challenging, the performance in northern Europe was stronger and it's basically continuing to execute against our strategy, which is try and offer great product to great product innovation and continue to focus on offering value to the consumer as well.

Okay. And last on this topic, do you see this trend to continue, the northern versus southern dynamics? And... Richard Coté: Again, I'll come back in to say that in the guidance I've given is that we see the northern Europe having modest growth and we see southern Europe continuing with economic uncertainty. So those markets are going to be interesting markets as they have been for last year or so.

We'll go next to Mike Richardson with Sidoti & Company.

I'm just wondering if -- I just wanted to follow up here a little bit, I'm wondering if you've changed the way you're thinking about inventory levels given the economic uncertainty, specifically in southern Europe? Richard Coté: I think from a standpoint of our inventory, I wouldn't sit there and say that there's a major change in our strategy. We, obviously, continue to refine our cycle times and our turnaround times and all of that. We continue to invest behind strong product performers in each of our brands. And obviously, we produce inventory based upon where we see our forecast taking place around the world. So we see the ability of continuing to have strong inventory performance versus our sales performance, so we may see pockets of growth taking place but certainly less than our sales growth that materializes each and every quarter.

Okay, great. And with regard to gross margin, obviously, a big jump here in the first quarter. Can you give us an idea of how we should be thinking about that for the balance of the year? I think previous guidance was sort of flattish year-over-year.

Yes, Mike, I can address that. This is Sallie. The largest contributor to gross margin, the improvement that we saw for this quarter, was the leverage on our fixed cost, as well as the channel and product mix that we experienced. And that favorable shift in channel and product mix as compared to last year, it was really a function of who we're selling to, is it direct, is it indirect to distributors. And we do not expect this level of favorability to continue, the year-on-year comparison for the remainder of this year. With that, as I said, that we do not expect it to continue, just to be clear.

And I have just one more and then I'll jump out. As part of the 3-year plan, I think you guys had talked about expectations for China sales in the area of about $30 million, I'm just wondering if that's still your target. And can you maybe give us an update on how things are going over there? Richard Coté: Yes. China is, again, a small part of the business, but an important for the long term future of Movado Group and how we expect to position ourselves there. We continue with good sales growth there. However, as we've all read in the paper, China market is not growing to the same level that it has been, which I don't think anyone really kind of expected that to continue. Inflation is certainly picking up there. But our business, again, which is relatively small, Movado is reasonably well-established with a standpoint of 150 to 175 doors, licensed brands are still in the early stages of focusing on its growth and its expansion. So we're pleased with where we are. We certainly see achieving the outlines that we've outlined in our strat plan, but understand that the China economy is -- was not going to continue on that ridiculous pace it has been on over the last couple of years.

At this time, we have one question remaining in the queue. [Operator Instructions] We'll take our next question from Oliver Chen with Citi.

About your earlier comments on inventory levels at your partners, could you just update us on what they look like at your retail partners? And are you seeing any kind of linear covenant growth, is that a potential opportunity with them, kind of specifically, to what you're seeing in North America wholesale?

I think inventories at retail are in a healthy position, so I mean they're in balance is what I would say. And I think that you are seeing some moderate increase in linear square foot as people renovate areas in the watch category becomes more important to North American department stores, I think, specifically dealing with your question. So -- but again, that's a moderate increase and it's over a long period of time because it entails significant renovations on retailers' parts.

And also your share gain is very impressive, could you roughly characterize what's happening? And with respect to other players losing share to you, are there trends in terms of who you're taking share from? If you could also just refresh us on what's happening in terms of the amazing growth in the sector at large and if -- the kind of context for like why people could be buying multiple watches at this point in time.

Sure. I think that over the last several years, we've been -- the whole category has been able to offer better product, better design and more interesting design at very strong value, so that has expanded the category. We believe that the expansion of that category is a long-lasting expansion. And I just think that we continue to stay focused on what we can control in our business, which, obviously, from an operating perspective are expenses and our operations, but also from a creative point of view is making sure that we offer the consumer great designs across our brands and continue to offer strong values at each and every price point. So that's really what we're focused on is executing against our plan.

What do you think the marketplace is doing in terms of pricing? I know you guys have had a prudent strategy to be positioned with strong value. Have you seen other players follow a similar strategy or choose to do otherwise?

I think it's a very competitive marketplace, so everybody is aware of what's going on. I don't think -- and so people continue to focus on offering strong values. The category, I think, you do see in other segments, in the upper end segments, the luxury segment over the last several years, people have had to pass increases due in the U.S. and dollar-based economies based on currency -- on very strong currency fluctuations, but that is somewhat balancing out now.

And my other question was on the full-year guidance looks very attractive. Do you have a sense of if we could expect fixed cost leverage in terms of SG&A growth relative to your sales and just roughly in how we think about that line item?

Oliver, this is Sallie. I'll take that. We would expect to have -- continue to see leverage on our fixed costs although you do have to add some fixed costs to -- as your sales grow, but you should definitely see our fixed costs growing at a lower rate than our sales growth.

[Operator Instructions] We'll take a follow-up question from Mike Richardson with Sidoti & Company.

Just one follow-up question, this is I guess going out a little bit, just in regard to the Ferrari license that's going to be rolled out next spring. Is that going to be rolled-out worldwide or is that going to be primarily in Europe, North America, just can you give me a sense there? Richard Coté: That obviously is a worldwide global license and obviously, a well recognized world brand, so that for us will certainly be a global business. And obviously, with the size of that and the global nature of it, it will certainly take a couple of years for us to be able to roll that out to the full extent that we want to, but that absolutely is a global business and again a good example of how we'd be able to leverage a pretty strong infrastructure we have around the world to be able to launch a new brand.

That concludes our question-and-answer session today. I'll now turn the call over to management for any closing comments they may have.

I would like to thank all of you for participating today, asking some very good questions, and wish all of you a great summer. So again, thank you very much for participating today.

This concludes today's conference call. Thank you for your participation.